Oracle (NASDAQ:ORCL) reported first-quarter earnings today. The world's second-largest software company met analyst earnings estimates of $0.08 per share on net income of $440 million. Sales increased 2% to $2.07 billion, but fell short of the $2.14 billion forecast.

Analysts had expected $592 million in new software sales, but new licenses dropped 7% to $525 million. The shortfall is especially disheartening given that Wall Street had hoped for a second straight quarter of growth in new sales, following several consecutive quarters of declines. Software license updates and product support produced $1.03 billion, 14% above the same quarter last year.

Expenses for the quarter include a $14.6 million expense related to an unsolicited $7.3 billion for rival PeopleSoft (NASDAQ:PSFT); however, the company generated $1.25 billion in cash, as "profitability continues to hit record levels."

Earlier this week, Oracle announced the release of its next generation database and application server, Oracle 10g. The software, which "runs 10 times faster than the largest server," is slated for release later this year. Analysts expect this will boost revenues some time in the second half of 2004.

Going forward, Oracle expects to earn $0.10 to $0.11 per share in the second quarter. Shares were down 5% to $12.30 midday on the earnings news.

Jeff Hwang can be reached at [email protected] .